Catur Samudra: Sister Ship Arrest, Guarantee Claims & Admiralty Jurisdiction

In The “Catur Samudra” [2010] SGHC 18, the Singapore High Court addressed the issue of whether a claim under a guarantee falls within the admiralty jurisdiction, specifically concerning the arrest of a vessel owned by a company guaranteeing the liabilities of a related charterer. The court, presided over by Steven Chong JC, set aside the writ of summons and the arrest of the vessel, holding that the claim under the guarantee did not arise from an agreement relating to the use or hire of a ship under the High Court (Admiralty Jurisdiction) Act and that the guarantor was not in possession or control of the vessel when the cause of action arose.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Writ of summons and warrant of arrest set aside.

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on whether a guarantee claim falls under admiralty jurisdiction for sister ship arrest. Appeal dismissed.

1.7 Decision Date

14 January 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
The "Catur Samudra"	Defendant	Other	Application Granted	Won	Richard Kuek, Govintharasah s/o Ramanathan, Mark Chan
PT Humpuss Intermoda Transportasi Tbk	Defendant	Corporation	Application Granted	Won	Richard Kuek, Govintharasah s/o Ramanathan, Mark Chan
Mahakam	Plaintiff	Other	Application Dismissed	Lost	Corina Song, Lim Ai Min
Heritage Maritime Ltd, SA	Other	Corporation

3. Judges

Judge Name	Title	Delivered Judgment
Steven Chong	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Corina Song	Allen & Gledhill LLP
Lim Ai Min	Allen & Gledhill LLP
Richard Kuek	Gurbani & Co
Govintharasah s/o Ramanathan	Gurbani & Co
Mark Chan	Gurbani & Co
Koh See Bin	Rajah & Tann LLP

4. Facts

The plaintiff owned the vessel Mahakam.
The defendant, HIT, guaranteed the obligations of Heritage under a Bareboat Charterparty.
Heritage is a wholly-owned subsidiary of HST, which is in turn a wholly-owned subsidiary of HIT.
Heritage defaulted on charterhire payments.
The plaintiff arrested the Catur Samudra, owned by HIT, claiming under the guarantee.
The plaintiff's claim against HIT was solely under the guarantee for payment of outstanding charterhire.
The guarantee was a condition precedent to the Bareboat Charterparty.

5. Formal Citations

The “Catur Samudra”, Admiralty in Rem No 304 of 2009, [2010] SGHC 18

6. Timeline

Date	Event
1952-01-01	International Convention Relating to the Arrest of Seagoing Ships came into force.
1976-01-01	The Eschersheim was decided.
1977-01-01	The Permina 108 was decided.
1982-01-01	The Span Terza and The Sextum were decided.
1987-01-01	The Fua Kavenga was decided.
1997-11-24	HIT listed on the Jakarta Stock Exchange.
2007-12-11	Memorandum of Agreement signed for plaintiff to purchase the Mahakam.
2007-12-11	Bareboat Charterparty signed, leasing the Mahakam back to Heritage.
2007-12-11	HIT executed a guarantee in favour of the plaintiff.
2007-12-13	The Mahakam was delivered to Heritage.
2009-04-16	Heritage defaulted on charterhire payment.
2009-05-01	Plaintiff commenced action in New York against Heritage and HIT.
2009-06-12	Plaintiff arrested the Mahakam in Malaysia.
2009-06-22	Plaintiff issued notice to Heritage to terminate the Bareboat C/P.
2009-06-23	Mahakam was redelivered to the plaintiff.
2009-08-31	Plaintiff served Points of Claim against Heritage in London arbitration.
2009-09-05	Plaintiff arrested the Catur Samudra.
2009-10-08	New York Rule B Order obtained by the plaintiff against HIT and Heritage was set aside.
2009-10-14	HIT filed an application to strike out the writ of summons and set aside the warrant of arrest.
2009-12-21	Court ordered the writ of summons and warrant of arrest to be set aside.
2010-01-15	Judgment was delivered.

7. Legal Issues

Admiralty Jurisdiction
- Outcome: The court held that the admiralty jurisdiction of the High Court was improperly invoked against the defendant's vessel.
- Category: Jurisdictional
- Sub-Issues:
  - Improper invocation of admiralty jurisdiction
  - Interpretation of 'agreement relating to the use or hire of a ship'
  - Whether a guarantee constitutes an agreement relating to the use or hire of a ship
  - Whether the guarantor was in possession or control of the vessel
Interpretation of s 3(1)(h) of the High Court (Admiralty Jurisdiction) Act
- Outcome: The court held that the plaintiff’s claim under the guarantee does not fall within s 3(1)(h) of the HCAJA.
- Category: Substantive
- Sub-Issues:
  - Scope of 'arising out of'
  - Scope of 'relating to'
  - Direct Connection Test
Sister Ship Arrest
- Outcome: The court held that the defendant was not in possession or control of the vessel at the time when the cause of action arose.
- Category: Substantive
- Sub-Issues:
  - Whether a ship owned by a guarantor can constitute a 'sister ship'
  - Common ownership
  - Possession or control of the vessel
Lifting the Corporate Veil
- Outcome: The court did not lift the corporate veil.
- Category: Substantive
- Sub-Issues:
  - Alter ego
  - Sham or façade
  - Fraud

8. Remedies Sought

Arrest of Vessel
Monetary Damages

9. Cause of Actions

Breach of Guarantee
Breach of Bareboat Charterparty

10. Practice Areas

Admiralty
Commercial Litigation
Shipping
Charterparties
Performance Bonds
Corporate Law

11. Industries

Shipping

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
The Eschersheim	House of Lords	Yes	[1976] 2 Lloyd’s Rep 1	United Kingdom	Cited regarding the 'sister ship' arrest rule, initially restricted to ships in common ownership by the same defendant, but later superseded by other decisions.
The Permina 108	Court of Appeal	Yes	[1977] 1 MLJ 49	Singapore	Cited as the case that declined to follow The Eschersheim, allowing the arrest of a vessel owned by a charterer even without common ownership with the vessel under which the cause of action arose.
The Span Terza	Unknown	Yes	[1982] 1 Lloyd’s Rep 225	United Kingdom	Cited as an example of a jurisdiction that adopted The Permina 108 in preference to The Eschersheim.
The Sextum	Unknown	Yes	[1982] HKLR 356	Hong Kong	Cited as an example of a jurisdiction that adopted The Permina 108 in preference to The Eschersheim.
The Fua Kavenga	High Court of New Zealand	Yes	[1987] 1 NZLR 550	New Zealand	Cited as a decision that dealt with a similar situation involving a claim under a guarantee, but not specifically considering the issues before the court. The court declined to follow it.
The Maritime Trader	Unknown	Yes	[1981] 2 Lloyd’s Rep 153	Unknown	Cited for the principle that the burden of proof is on the plaintiff to satisfy all jurisdictional requirements to invoke admiralty jurisdiction.
The Andres Bonifacio	Unknown	Yes	[1991] 2 MLJ 371	Unknown	Cited for the principle that the burden of proof is on the plaintiff to satisfy all jurisdictional requirements to invoke admiralty jurisdiction.
The Aventicum	Unknown	Yes	[1978] 1 Lloyd’s Rep 184	Unknown	Cited for the principle that the plaintiff must satisfy the burden of proof on a balance of probabilities.
The Alexandrea	Unknown	Yes	[2002] 3 SLR 56	Singapore	Cited for the principle that the plaintiff must satisfy the burden of proof on a balance of probabilities.
The I Congresco	Unknown	Yes	[1977] 1 Lloyd’s Rep 536	Unknown	Cited for the principle that any question of jurisdiction must be dealt with on the motions and cannot be dealt with as an issue in the actions.
The Permina 108	Unknown	Yes	[1977] 1 MLJ 43	Singapore	Cited for the four conditions under s 4(4) of the HCAJA that must be satisfied to invoke admiralty jurisdiction.
The Inai Selasih	Unknown	Yes	[2005] 4 SLR 1	Singapore	Cited for the four conditions under s 4(4) of the HCAJA that must be satisfied to invoke admiralty jurisdiction.
The Antonis P Lemos	House of Lords	Yes	[1985] AC 711	United Kingdom	Cited for the principle that the provisions of the HCAJA, including s 3(1)(h), are to be given a 'broad and liberal construction' and that the expression 'arising out of' should be given its wider meaning of 'connected with'.
The Indriani	Unknown	Yes	[1996] 1 SLR 305	Singapore	Cited in support of the argument that the provisions of the HCAJA including s 3(1)(h) are to be given a 'broad and liberal construction'.
The Mara	Unknown	Yes	[2000] 4 SLR 156	Singapore	Cited in support of the argument that the provisions of the HCAJA including s 3(1)(h) are to be given a 'broad and liberal construction'.
National Bank Leasing v Merlac Marine Inc	Federal Court of Canada	Yes	(1992) 52 Federal Trial Reports 15	Canada	Cited as a decision that dealt with a similar situation involving a claim under a guarantee, but the court declined to follow it due to a lack of analysis of the relevant expression 'relating to'.
The St Elefterio	Unknown	Yes	[1957] P 179	United Kingdom	Cited for the principle that a claim in tort falls within the UK equivalent of s 3(1)(h).
Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co	House of Lords	Yes	[1985] AC 255	United Kingdom	Cited for the 'direct connection' test, stating that to constitute 'an agreement relating to the use or hire of a ship' the agreement must have some 'reasonably direct connection with such activities'.
The Queen of the South	Unknown	Yes	[1968] 1 All ER 1163	United Kingdom	Cited as an example where the agreement for mooring and unmooring services directly involved the use of motor boats in providing the services.
The Tesaba	Unknown	Yes	[1982] 1 Lloyd's Rep 397	United Kingdom	Cited as an example where claims which have some appearance of a connection with the use or hire of a vessel were nevertheless held to fall outside the equivalent of s 3(1)(h).
The Aifanourios	Unknown	Yes	(1980) SC 346	Unknown	Cited as an example where claims which have some appearance of a connection with the use or hire of a vessel were nevertheless held to fall outside the equivalent of s 3(1)(h).
The Bumbesti	Unknown	Yes	[1999] 2 Lloyd’s Rep 481	United Kingdom	Cited as an example where claims which have some appearance of a connection with the use or hire of a vessel were nevertheless held to fall outside the equivalent of s 3(1)(h).
The Sonia S	Unknown	Yes	[1983] 2 Lloyd’s Rep 63	Unknown	Cited as an example where a claim for outstanding hire payable under an agreement for the hire of containers was observed to have been wrongly decided and should be overruled.
Port of Geelong Authority v The Bass Reefer	Federal Court of Australia	Yes	(1992) Federal Court Reports 374	Australia	Cited for the Australian approach of the 'direct connection' test.
The Zeus	Unknown	Yes	[1888] 13 PD 188	United Kingdom	Cited to illustrate that unless it can be established that the agreement is one in relation to the use or hire of a ship the fact that the word 'demurrage' is used is immaterial.
The Evpo Agnic	Unknown	Yes	[1988] 2 Lloyd’s Rep 411	Unknown	Cited for the principle that the establishment of one-ship companies within a group of companies is a well-known and legitimate practice in the shipping industry.
The Neptune	Unknown	Yes	[1986] HKLR 345	Hong Kong	Cited as an example of unsuccessful attempts to lift the corporate veil in the context of one-ship companies with common shareholdings and/or directors.
The Interippu	High Court	Yes	[1990] SGHC 131	Singapore	Cited as an example of unsuccessful attempts to lift the corporate veil in the context of one-ship companies with common shareholdings and/or directors.
The Skaw Prince	Unknown	Yes	[1994] 3 SLR 379	Singapore	Cited as an example of unsuccessful attempts to lift the corporate veil in the context of one-ship companies with common shareholdings and/or directors.
The Saudi Prince	Unknown	Yes	[1982] 2 Lloyd’s Rep 255	Unknown	Cited for the principle that the court may be minded to lift the corporate veil if there are exceptional circumstances which indicate the presence of a façade or sham set up to deceive or to perpetrate a fraud.
Win Line (UK) Ltd v Masterpart (Singapore) Pte Ltd	Unknown	Yes	[2000] 2 SLR 98	Singapore	Cited for the principle that the court may be minded to lift the corporate veil if there are exceptional circumstances which indicate the presence of a façade or sham set up to deceive or to perpetrate a fraud.
The Ohm Mariana	Unknown	Yes	[1993] 2 SLR 698	Singapore	Cited for the principle that s 4(4)(b) of the HCAJA refers to parties with substantive as opposed to nominal or formal interest in relation to the ship.
The Permina 3001	Unknown	Yes	[1977] 1 MLJ 141	Singapore	Cited as an example of a person 'in possession or in control' of a vessel.
Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland	Federal Court of Australia	Yes	[1995] FCA 1565	Australia	Cited as a case where the claimant sought and succeeded in lifting the corporate veil to show that the parent company was the beneficial owner of the vessels.
Shipping Corporation of India v Jaldhi Pte Ltd	Second Circuit Court of Appeals of the Southern District of New York	Yes	585 F.3d 58, 71 (2d Cir.2009)	United States	Cited for the holding that Rule B Orders are not available to attach electronic fund transfers in the possession of intermediary banks for processing.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 18 r 19

14. Applicable Statutes

Statute Name	Jurisdiction
High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Admiralty Jurisdiction
Sister Ship Arrest
Guarantee
Bareboat Charterparty
Condition Precedent
Direct Connection Test
Corporate Veil
Possession or Control
Arising Out Of
Relating To

15.2 Keywords

Admiralty
Shipping
Guarantee
Sister Ship Arrest
Singapore
Jurisdiction
Charterparty

16. Subjects

Admiralty
Shipping
Contract Law
Jurisdiction

17. Areas of Law

Admiralty Law
Contract Law
Statutory Construction
Shipping Law
Agency Law
Company Law